Industry responds: NY Times discovers Step 2 program

Forrest Laws Farm Press Editorial Staff | Nov 14, 2003

The New York Times is at it again. The newspaper that apparently has begun to consider itself an expert in agriculture has just discovered the 3-Step Competitiveness program for cotton — with the help of the Environmental Working Group.

In a recent edition, the Times reported that the U.S. government is subsidizing purchases of U.S. cotton by U.S. textile mills merchants and listed some of the largest recipients of the subsidies.

“Hidden in plain sight, a federal farm subsidy program is paying nearly $1.7 billion to American agribusinesses and manufacturers to buy American cotton that is already one of the most highly subsidized crops in the world,” wrote Elizabeth Becker, a reporter who covers agricultural issues for the Times.

“The plan, which is the equivalent of paying Kellogg's to buy American corn, is known as the upland cotton marketing certificate program and was started in 1990 when American cotton was selling at a much higher price than foreign cotton.”

The National Cotton Council struck back at the Times report, saying Step 2 of the 3-Step program “is vital to U.S. cotton's competitiveness and helps the industry ‘ride out’ downturns that range from severe currency fluctuations to massive increases in subsidized Asian polyester production.

The NCC also responded to the Environmental Working Group's posting of Step 2 recipients and amounts received on its Web site, noting that these payments are part of “a highly successful” federal 3-step cotton competitiveness program primarily designed to help cotton producers.

The EWG listed farmer recipients of government farm program payments on its Web site in 2001 as part of an attempt to persuade Congress to enact more restrictive payment limits as part of the new farm bill.

“The competitiveness program for cotton is an important component that enables the U.S. cotton industry to better compete in a difficult economic environment,” said NCC Chairman Bobby Greene. “Despite the presence of the competitiveness program, most foreign growths of cotton still manage to undercut U.S. cotton prices in international markets. This program better enables our industry to respond to aggressive pricing by our competitors.”

Greene, a ginner from Courtland, Ala., said, “It is extremely fortunate that these competitiveness programs for cotton have been in place over the last several years; otherwise the U.S. textile industry likely would have suffered even more job losses and plant closures than already have occurred.”

Becker quoted a “senior agricultural official” as saying that the program was intended to make up temporarily for the difference between high American prices and world cotton prices. He said the cotton industry has fought to keep the program because it “hasn't wanted to adjust to the world market; it would be too painful for them.”

Responding to the quote, NCC President Mark Lange said the Step 2 program was conceived as an additional competitiveness tool to help U.S. farmers defend against subsidized foreign cotton and cotton products and compete in international markets that are riddled with government intervention — particularly the many centrally planned states that dominate a significant portion of the world cotton trading market.

“Some form of a competitiveness program for cotton has been in legislation since 1985 — almost 20 years,” Lange said. “The 3-step competitiveness program in particular has been enacted and re-enacted three times by Congress.

“This program's attributes, its costs and its success in keeping U.S. cotton stocks at manageable levels and reducing the government's inventory management exposure while avoiding reliance on production controls are well-known and widely supported.”

Lange said there is nothing new in the EWG report, which is another attempt by the organization to sensationalize farm programs and turn public opinion against a program that helps the U.S. cotton producer compete in international markets despite raw fiber and textile tariff inequities, weak or manipulated Asian currencies, and competitors' policies designed to favor their domestic cotton and textile industries.

The Times article quoted EWG President Ken Cook as saying “there is very good reason to think that the U.S. cotton subsidy system is badly broken.”